Digital currency: why China is in the lead
Audio 04:00
Bundles of Yuan.
(Illustrative photo) AFP / File
By: Dominique Baillard Follow
8 min
To celebrate the Lunar New Year, the Chinese authorities are offering an envelope of digital yuan issued by the central bank to a skewer of handpicked Pekingese.
A new experiment.
Within a year, China could be the first state in the world to launch its own digital currency.
Publicity
Each of the 50,000 selected participants received a digital briefcase, containing the equivalent of $ 30, which they can use as a virtual payment method for a week.
This is the third full-scale test for this yuan of the future that the Chinese central bank has been preparing for several years now, with the assistance of the four largest banks in the country.
This activism is starting to worry the big money-makers in other countries;
they too are preparing their digital currency.
Japan wants the issue of crypto currencies issued by central banks to be discussed from tomorrow Friday at the meeting of G7 finance ministers.
Could China impose its digital currency on the rest of the world?
The yuan is still not freely convertible on the market for major international currencies, and therefore little available abroad, and "
currency exchanges are still largely dominated by the dollar, at 80%
"
recalls the economist specializing in digital finance David Bounie, which is why this hypothesis seems hardly credible.
It is more a strong political signal that China wants to send with this digital currency that it dreams of putting into circulation for the Winter Olympics scheduled for next year in China.
If it succeeds
,
"
it will have a worldwide impact, we will look at the architecture, the technology, the economic model of this first
" underlines David Bounie
.
With this digital yuan, Beijing is first of all seeking to solve domestic problems.
As Americans and Europeans were afraid of Facebook's Libra currency project, the Chinese fear competition from private digital currencies already on the market.
Beijing got rid of bitcoin by banning its use.
This crytpo currency, which is not governed by any central authority, is however not the most immediate threat for the yuan because it has failed to establish itself as a means of payment, it is above all a speculative investment. .
On the other hand, Alipay and Wechat pay, the electronic wallets offered by the Chinese internet giants Alibaba and Tencent, have become very worrying rivals.
Because in China, payment via these platforms is already very widespread.
Their rise could limit the powers of the central bank.
It could no longer control the flow of money passing through these companies.
Beijing also hopes to expand financial inclusion with its digital currency.
In this huge country where the banking network is still underdeveloped, a simple telephone would provide access to cash for all citizens.
This opens up entirely new horizons for the central bank.
In a crisis situation, it could replenish the digital accounts of all individuals to support them, without going through the banks, or on the contrary impose negative rates on their accounts if it finds that they are not spending enough, explains David Bounie.
A much more direct monetary policy tool, but it is still difficult to assess the cost / benefit ratio.
The only certainty is that the banks could suffer: they will lose their management activity for individuals, which would ultimately reduce their ability to lend money and therefore to finance the economy.
In Africa, some already imagine that the digital yuan could become the reference currency.
The Kenyan Michael Kimani, expert in finance 2.0, believes that it will easily impose itself on the continent given that the infrastructure of African networks, smartphones are mostly provided by Chinese companies.
An unlikely scenario according to economists, as long as the yuan is not convertible into local currencies, which still seems a long way off.
On the other hand, it is true that this Chinese digital currency is of great interest to African countries to accelerate financial inclusion there too.
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